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Before the markets opened this morning CNBC's David Faber reported that the negotiations hit a snag over price. The news sent Intel Corp. (Nasdaq: INTC) stock lower by 3% and Altera stock down more than 6% in pre-market trading.
Both stocks opened lower, but had mostly recovered by noon.
According to Faber's sources, Altera wasn't happy with Intel's offer price in the "low $50s" per share. Intel was willing to pay as much as $54.
That's not a bad premium for a stock trading at $43.55. And it should be enticing enough to Altera shareholders for them to push the board to reconsider.
Indeed, the measured reaction from Wall Street hints that not everyone is convinced the deal is totally dead.
Wall Street Likes an Intel-Altera Deal
For sure, Wall Street reacted enthusiastically when word first broke of a brewing deal on March 27. On that day INTC stock rose 6.4%, while Altera stock soared 28%.
It's still a good deal for both companies – good enough that both parties could be compelled back to the bargaining table.
Buying Altera would fit with Intel's strategy of going after new growth markets like wearable tech and Big Data. Altera's chip technology is widely used in data centers.
The prospect of an Intel-Altera deal also reflected a trend toward acquisitions in the semiconductor sector. Last month NXP Semiconductor (Nasdaq: NXPI) announced a $12 billion purchase of Freescale Semiconductor (NYSE: FSL).
And many smaller deals have taken place. The semiconductor sector saw $31 billion worth of M&A deals last year, the most since 2011.
Intel won't get left out of the M&A party. It has no choice. The future health of Intel stock depends on whether the company can expand into new areas not dependent on PC sales.
About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.